ICAEW member appeals disciplinary sanction, loses, incurs increased costsby
An ICAEW member attempted to appeal their disciplinary, but ended up facing increased penalties and a raised reprimand.
Adrian Duncan appeared before the ICAEW appeal committee (AC) this February to contest costs and sanctions set by the disciplinary committee (DC), dating back to July 2020.
The grounds for his appeal were set out as follows in the ICAEW’s report:
- The penalties were excessively harsh and disproportionate.
- The amount of the costs order was excessive.
- The DC failed to refer to a subsequent QAD visit to the appellant’s practice.
- The DC failed in a number of respects to take adequate account of the medical evidence submitted on the Appellant’s behalf.
- The DC’s approach to the costs issue had been incorrect.
The appeal committee not only rejected the appeal, but then decided to increase the disciplinary sanction against Duncan. The appellant’s costs were originally set at £8,977, but a further £6,135 was added for the appeal. The reprimand was also raised to a severe reprimand.
Reasons for severe reprimand
The Investigation Committee took disciplinary action based on Duncan’s lack of communication and compliance; the appellant took no steps to reply to letters and emails from the ICAEW concerning their investigation.
The AC was also unable to detect any mitigating circumstances or factors that had been omitted from the original disciplinary reasons.
At the time, the DC was aware that Duncan had personal problems, but the report states that he took no steps to counter those issues. Furthermore, the AC took the view that if Duncan was fit to carry on practice as a member of the Institute, he was equally fit to abide by its rules and comply with its lawful requests.
For these reasons, the AC felt that the DC had been exceptionally lenient in their original sanction but Duncan had failed to accept this, thereby refusing to acknowledge the consequences of his actions.
The AC had “no hesitation” concluding that this was a rare case in which an appellate tribunal should increase the previously imposed penalties.
Duncan was originally sanctioned as a result of two complaints:
- He failed to provide by 28 March 2019 the information, explanations and documents requested in a letter dated 12 March 2019 issued under Disciplinary Bye-law 13.
- He failed to provide by 30 May 2019, the information, explanations and documents requested in a letter dated 14 May 2019 issued under Disciplinary Bye-law 13.
Duncan’s disciplinary decision dates back to July 2020, in which he was fined £1000 and reprimanded for each complaint on top of costs of £8,977.
Reasons for complaints
Duncan has been a member of the ICAEW since late 2008. He is a licenced insolvency practitioner and practises as a sole practitioner and director of the firm Savants Advisory Limited.
The ICAEW’s quality assurance department conducted a standard monitoring visit to Duncan’s firm during December 2017, after which they raised a number of concerns to the insolvency licensing committee, who then referred the matter to the professional conduct department.
This department sent Duncan a letter during August 2018, informing him that they were investigating the areas of concern raised:
- Whether sufficient controls were in place to ensure that all matters relating to his insolvency appointment were dealt with in line with the insolvency legislation required.
- Whether there had been failure to undertake a full reconciliation of all insolvency service accounts (ISAs) to ensure the correct amounts have been paid to the ISA.
- Whether excessive fees had been drawn on cases.
- Whether there had been a failure to pay the petitioning creditors in priority to Duncan’s own fees.
The letter also requested that Duncan respond with answers and information in relation to the concerns, with a deadline of around a month.
After receiving no response, chasing letters were sent during November 2018 and January 2019.
Duncan did reply in February 2019, explaining that he had personal problems with an assurance that the information requested would be ready within two weeks.
When this didn’t happen, ICAEW issued Duncan with a formal notification asking for a response by 29 March 2019. This, again, failed to occur.
After further lack of communication from Duncan, the situation was deemed appropriate for disciplinary action during May 2019, nine months after the original letter stating their concerns was sent out.
The tribunal decided on a fine of £1,000 for each complaint (making a total of £2,000), as well as costs of £6732 for one complaint and £2,245 for the other (making a total of £8,977).
On the appeal, further costs of £6,135 were imposed on Duncan. His reprimand was also raised to a severe reprimand.
Senior Associate for Blake Morgan LLP Matthew Corrie comments:
Mr Duncan had been warned of the risk that the appeal committee could increase the sanction and had been given an opportunity to avoid this if he abandoned the appeal. Given the fairly damning nature of the decision Mr Duncan was, perhaps, lucky not to have the fines increased as well as the reprimand.
This decision is an example of the perils faced by members of the ICAEW when appealing decisions of the Disciplinary Committee. The Appeal Committee's powers to vary a finding or order under Disciplinary Bye-Law 29.2 include that a sanction can be increased. With this in mind, practitioners and their legal teams should always carefully consider such a risk when deciding whether to pursue an appeal.